Chevron Plans To Divest Two Nigerian Offshore Blocks Again
Zacks Investment Research | Nov 28, 2019 08:49PM ET
Chevron Corporation (NYSE:CVX) intends to divest interests in two hydrocarbon blocks located offshore Nigeria, per Reuters. The energy major plans to get rid of aging assets at the shallow water site in order to focus on its thriving U.S. operations.
The divestment process is said to be looked after by Scotiabank.
About the Assets
The San Ramon, CA-based integrated energy company intends to sell a 40% stake in the Oil Mining Lease (“OML”) 86 and OML 88. These assets, which produce 6,200 barrels of oil equivalent a day, have 55 million barrels of proved and probable reserves and contain 2.8 trillion cubic feet of undeveloped natural gas reserves.
Notably, the company’s 2018 net daily hydrocarbon output in the country had averaged 233 million cubic feet of natural gas, 194,000 barrels of crude oil and 6,000 barrels of liquefied petroleum gas.
Rationale
This divestment will bring Chevron closer to the target of streamlining its portfolio. The move can be part of Chevron’s strategic review of global portfolio to determine the competitiveness of its projects. This decision can be a prudent one, considering the fact that the African country is currently suffering from pipeline thefts. Moreover, uncertainty regarding Nigeria’s tax regime adds to the woes.
Importantly, this is not the first time that Chevron is trying to offload the Nigerian assets. The company’s divestment efforts in 2015 were hampered by oil price crash in 2014. This move will likely enable Chevron to shift its focus on more profitable areas such as the U.S. Shale and Gulf of Mexico.
Price Performance
Chevron has gained 8.5% year to date against the 3% decline of its Zacks Investment Research
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